American jobs are growing again. It brings good news, but there is a darker side to the latest data as well. What’s the truth about the good, bad, and ugly in the US job market?
American Jobs are Back
While there have been many great things going on in the US economy and real estate market, many have been longing for jobs to come back. Following 2008 seven figure earning CEOs found themselves working for minimum wage at fast food joints. That’s if they were lucky. Many others found themselves in lines of hundreds of people lining up for single jobs which promised terrible treatment and pay, despite candidates being far over qualified. Jobs and demand for works has come back since then. The scales have definitely been tipping in favor of workers and entrepreneurs. Inflation in the job market definitely reflects that. Yet, many have reported that jobs and wages have been dragging on the economy and housing industry. Families and real estate professionals have been eager to see the golden days back again. New data and news headlines suggest those days may soon be here. Yet, is it really all it’s cracked up to be? What might be the downside of the latest job figures?
Over the last couple of months news headlines have been packed with stories of tens of thousands of jobs being brought back to America. Tech and energy firms, and auto manufacturers all appear to be expanding and adding more jobs within the US. Then there are thousands of real estate positions which have opened up thanks to a new building and investment boom.
According to CNBC, ADP, and Moody’s Analytics almost 300,000 new jobs were created in February 2017. That’s around 100,000 more than estimates called for. Revised figures show growth in January was better than expected as well. It also isn’t likely to include many part-time positions, freelance gigs, or all the startups which are launching. The Bureau of Labor Statistics now puts national unemployment at just 4.7%. That’s likely to drop even closer to zero as tens of thousands of additional jobs open up over the next few months.
More jobs, and more competition for employees can be a great thing. Working conditions get better, and more confidence can lead to more real estate purchase and investment activity.
While an increasingly strengthening job market is likely to mean higher wages, there can be some downsides too. Higher wages are needed to support spending and housing affordability. In turn, that supports sales activity and home price growth. However, news service Reuters highlights that wages haven’t been growing that fast. At least not yet.
Still, The Fed is set to raise interest rates, in great part because of job growth. There could be several rate hikes this year. That means any minor wage increases could be offset by higher inflation. If your gas, groceries, car, house, credit card, and other bills all rise at the same time, you’ll need a pay raise, just to keep up.
Current trends do suggest that jobs will continue roaring back, with wages trailing them. We could have several very strong earning years for workers, startups, and real estate investment firms. That is barring the power that be deflating the tires with some poor financial moves. It may take a few months for wages to catch up, and lenders to balance access to credit with higher borrowing costs. Most don’t see any big problems there, even if they wish it was fixed yesterday.
The real ugly side of new job and wage growth is the temptation to stay an employee. Some who have been preparing to take control of their lives and financial futures by investing in real estate may be lured back into corporate America for a couple ‘quarter raises’. Some startup entrepreneurs may fold their operations to take big salaries at bigger firms. Some of the previously unemployed may fall into the 9-5 trap. Jobs are back, that can be a good thing. Just don’t get one yourself. It is almost inevitably a sure way to take you further from your real goals and desires.
If you want to design your own life, enjoy more income, and have more free time, do not get a job. Resist the temptation. Invest or start your own venture and live on your terms.